No Canada-U.S. trade deal expected before American midterm elections: sources

The Canada-U.S. trade war is poised to grind on for the foreseeable future, as sources tell CBC News hope of a deal before the American midterm elections has completely faded.

According to three sources with knowledge of the situation, Canadian government officials have been informing industry groups over the past few weeks that there is no expectation a deal can be reached before the Nov. 3 vote. 

There is no substantial engagement at this time, according to the sources, even though officials from both countries remain in contact. 

The sources have also been told that the White House is fully immersed in the election campaign. U.S. President Donald Trump is spending much of his time on the road holding rallies, as polls suggest his Republican Party is facing an uphill battle to maintain control of the House and possibly even the Senate. 

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CBC News agreed not to name the sources as they were not authorized to speak publicly about this active and sensitive issue. 

"There was some optimism within some parts of the [federal] government and in certain parts of Canadian industry that we might have seen a deal ahead of the midterms," said Brian Clow, who was former prime minister Justin Trudeau's deputy chief of staff.

"But that window appears to be entirely closed."

The optimism was rooted in the idea that because the trade war with Canada is unpopular with some American voters — those who blame Trump's trade and tariff policies for an increase in the cost of living — the Trump administration would be motivated to cut a deal.

The trade war with Canada is unpopular enough that some Republican candidates have distanced themselves from the president and his agenda. Sen. Susan Collins of Maine is among the Republicans who have publicly pushed back as she finds herself in a tight re-election race. 

Trump will keep Trumping, regardless of result

Whatever the results of the midterm elections may be, Clow said that Canadians should not anticipate much change when it comes to trade. 

He suggests the Democrats taking power away from Republicans would provide "a marginal benefit to Canada" at best.

He says Trump could be distracted if a Democrat-led House or Senate launches investigations into his administration. They also could pass legislation that attempts to rein in some of Trump's policies. 

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However, Trump has already signalled he will veto anything he doesn't like. 

"He still has a lot of tools to inflict a lot of damage on Canada and the rest of the world when it comes to trade," Clow said. "I expect no matter what happens … he's still going to use those tools."

Trump has carried out his tariff strategy using executive orders, along with actions by the U.S. Commerce Department and the U.S. Trade Representative's office. None of those options go away if Republicans lose the midterms. 

"We're not going to get relief from Congress changing in the short term," said Flavio Volpe, a member of the Canada-U.S. economic advisory committee and president of the Automotive Parts Manufacturers' Association.

But if Democrats are successful, Volpe says that will mean "more adults in the room."

More threatened tariffs on horizon 

With no end in sight to the trade tensions, more threatened tariffs are less than three months away.

Days after trade talks fell apart in August, Trump again complained about Canada "ripping off" the United States. 

"On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts and Steel will be increased to 50%," he wrote on his Truth Social platform. 

"WE DON'T NEED CANADA, THEY NEED US!"

Clow says this new deadline will incentivize Canada to see if there's some sort of agreement to be made. 

"Like a lot of threats we've seen from this administration you have to take it seriously even if it may not come to pass," he said. "And unfortunately we won't know until Jan. 1 whether this is a real threat."

When asked about the status of these possible tariffs, U.S. Trade Representative Jamieson Greer declined to provide specific details. 

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At the G20 trade ministers' summit in Milwaukee three weeks ago, Greer rejected the assertion that this is a threat and denied that Canada is being targeted. 

He said tariffs are part of U.S. "domestic economic policy" and that they're "not focused on any one country."

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‘Door is always open’ for U.S.-Canada trade talks, says Greer

September 30|

Duration

1:35

If work is happening behind the scenes to move ahead with these new tariffs, Canadian industry officials say they have not been given any sort of heads up.

"We haven't seen any paperwork," says Volpe. 

In order for a tariff threat to become a reality, it requires some form of legal documentation to bring the policy into force. Those documents outline the scope of the policy and the laws being used to enforce the levies.  

"They know that if they tariff auto parts from Canada, they shut down the entire American automotive manufacturing structure simply because those parts will not get delivered," Volpe said. 

While Volpe is confident the Trump administration will back away from new tariffs on auto parts, he said he isn't so sure about autos and steel. 

"[Trump] just might be willing to sink Detroit trying to prove some point that nobody can understand," he said. 

Canada the irritant

Trump routinely uses Canada as a punching bag in his campaign rally speeches. 

"At some point, we're making a deal that's gonna be amazing," Trump said during a stop in Highland Heights, Ky., on Saturday. 

"But for years we've lost billions and billions of dollars, and they just felt so emboldened."

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Trump has long been frustrated by trade deficits, including with Canada. However, he regularly exaggerates the actual number. 

He was cheered when he called Trudeau a "loser" before taking aim at Prime Minister Mark Carney.

"Your current guy's good … he's a nice guy, but he's not nice when it comes to trade," he said.